Final answer:
The annual exclusion for gift and estate tax refers to the amount an individual can give tax-free each year, with recent exclusions set at $14,000 and the estate tax affecting inheritances over $5.43 million.
Step-by-step explanation:
The statement refers to the annual exclusion for gift and estate tax, which in the context provided is $14,000. This exclusion allows individuals to give away up to that amount to as many people as they like each year without incurring a gift tax. On top of this, the estate tax applies only to significant inheritances. According to the Center on Budget and Policy Priorities, as of 2013, an estate tax was levied on estates exceeding $5.25 million, and this threshold was updated in 2015 to $5.43 million. These figures indicate that the estate tax is relevant only for those with high levels of wealth.